Mitf is a helix-loop-helix transcription factor whose mutation produces severe osteopetrosis in multiple species. Osteoclast lineage cells from Mitf-mutant mice develop, but appear to arrest at approximately the fusion stage and exhibit profoundly defective bone resorption. This late developmental defect suggests that the Mitf transcription factor regulates late osteoclast differentiation genes, rather than global regulators of lineage determination. The identification of those genes and the transcriptional controls which modulate their expression stand to provide important new targets for the treatment of bone disorders in man. We observed that dominant negative alleles of Mitf produce severe osteopetrosis whereas null alleles do not. On this basis we identified TFE3, a related HLH factor, as a dimerization partner which shares transcriptional activities with Mitf in the osteoclast lineage. This overlapping role for Mitf and TFE3 has been verified in a double-null mouse model. We have also demonstrated that M-CSF, a vital cytokine for both early and late osteoclast development, triggers MAPK phosphorylation of both Mitf and TFE3 on a conserved serine, stimulating their recruitment of the coactivator p300. Mutation of this phosphoacceptor serine disrupts late osteoclastic differentiation. In addition to this post-translational regulation, we have identified several Mitf/TFE3 transcriptional target genes including the secreted protease cathepsin K, and the survival gene Bcl2. In vivo disruption of these genes results in osteopetrosis. The essential roles for Mitf/TFE3 specifically for late osteoclast maturation affords a unique opportunity to discover key pathways and mediators of the bone resorption process through the analysis of their biochemical regulation and target gene identification. We propose to carry out this analysis in two Specific Aims. The first focuses on elucidating transcriptional and post-translational mechanisms which regulate expression and activity of Mitf and TFE3, which in turn modulate late osteoclast development & bone resorption. The second represents a systematic approach to the identification of transcriptional targets of Mitf/TFE3 using screens which couple their biochemical activities to the signaling pathways in which they reside.